Valued at a market cap of $19.4 billion, Edison International (EIX) is a leading American holding company primarily involved in the electric utility sector. Headquartered in Rosemead, California, it is best known as the parent company of Southern California Edison (SCE), a major regulated utility that provides electricity to millions of customers in Southern California.
Shares of this electric utility company have underperformed the broader market over the past 52 weeks. EIX has dropped 23% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 22.3%. Moreover, shares of EIX are down nearly 37.3%, lagging behind SPX’s 4% gain on a YTD basis.
Narrowing the focus, EIX has also trailed the Utilities Select Sector SPDR Fund’s (XLU) 31.2% gain over the past 52 weeks but has underperformed XLU’s 4.5% rise on a YTD basis.
On Jan. 27, Edison International shares dropped 1.9% after a Bloomberg Law report revealed a lawsuit alleging that the company’s Southern California utility equipment caused the deadly Eaton fire. The lawsuit claims that an electric arc from Edison’s equipment ignited the fire above Altadena, with supporting video footage reportedly showing electricity arcing before the fire started. Edison’s spokesperson stated that it is premature to comment until experts review the footage. The company has also been involved in preserving critical infrastructure data to aid investigations.
For FY2024, that ended in December, analysts expect EIX’s EPS to grow 4% year over year to $4.95. The company’s earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 10 “Strong Buy,” one “Moderate Buy,” six “Hold,” and one “Strong Sell” rating. This consensus rating is less bullish than a month ago when 11 analysts rated it a “Strong Buy.”
On Feb. 14, Morgan Stanley (MS) reduced its price target for Edison International from $71 to $48 and maintained an “Underweight” rating. The firm cited the financial risks facing California utilities following the Eaton Fire and ongoing concerns about the wildfire fund's adequacy. Morgan Stanley believes the fund may no longer be sufficient to support the financial health of utilities, and without a clear plan to replenish it before fire season, Edison International’s stock could face further selling pressure.
The mean price target of $79.79 represents a 59.4% upside from EIX’s current price levels. The Street-high price target of $108 suggests an upside potential of 115.7%.
